Once the head was off, we noticed that #4 piston was extremely clean. It also looks like the head gasket blew toward the back of #4. The fire ring on the gasket was torn off from the rest. We also noticed that the #3 cylinder had lots of carbon deposits. When we inspected the head, #3 dome had jagged carbon deposits. Once we cleaned the deposits off the head, it was evident that something got lose in the cylinder and tore up the #3 dome. It also looks like the intake valve and seat was replaced on #3. Apparently one of the PO's took the head off, replaced the seat and valve, and just put the head back. We didn't see any attempt to smooth out the irregularities. You can see the marks (slight damage) on top of the piston as well on #3. My in-laws feel that the head can be rebuilt and used. I am just dumbfounded that someone will put a gead back on with this type of damage!
I searched for a used head and found one on eBay; interestingly on that head the #1 dome shows similar damage! Is it common for the TC engines to break a valve? Could it be a spark plug that broke off?
I am posting some pictures of the head and the top of the block. Not sure if you can see the damage.
Cylinder Head

Cylinder Head with #3 shown

Cylinder Head with #4 Gasket Deterioration

Block

Block with #3 Piston Shown

Cylinder Head with #3 After a Quick Cleaning

Cylinder Head with #3, another view
